FILE - Inside their East Washington Street office, Amy Emery and Kim Jackson, owners of ID Interiors, look through plans and materials for a project on Wednesday, February 13, 2013.

A key to continuing this state's economic revival is encouraging investors to put their money into South Carolina businesses, particularly into the locally grown companies that can grow quickly, develop deep roots in the community and help generate even more economic growth. A new law recently signed by Gov. Nikki Haley creates some very specific tax credits that could help tremendously.

The bill will create tax credits for so-called "angel investors" who give money to small state companies that are involved in manufacturing, processing, warehousing, wholesaling, technology and some other related fields. The companies need to be less than five years old, have fewer than 25 employees, annual revenues of less than $2 million, and have the potential to grow quickly.

The tax credits are capped at $100,000 per investor and a total of $5 million. If the investor realizes a return on his investment, the credit needs to be paid back, a unique feature of South Carolina's angel tax credit law that lets taxpayers recover their investment when companies and angel investors are successful.

Angel investors can be critical to promoting start-ups in high-tech industries that can grow quickly, provide many jobs and pay high salaries. In other states where similar credits have been used the result has been extremely positive, according to an op-ed in The Greenville News that was co-written by one of the bill's sponsors, Rep. Dwight Loftis.

In Minnesota, a 2010 investment tax credit attracted $63 million in investment while giving out $15.8 million in credits. In Wisconsin, a similar law more than quadrupled the number of angel investment groups and attracted $141.5 million in private investment after three years.

About 25 other states have similar laws, including Georgia and North Carolina, both of which are ahead of South Carolina in attracting angel investment and venture capital funds.

Loftis and Wayne Roper of the South Carolina Biotechnology Industry Organization said in their op-ed that the law could triple the number of investors in this state and tap into up to $57 million of private capital. In a news release by the Greenville Chamber of Commerce that supports the bill, Mark Dunbar of Upstate Carolina Angel Network, said just less than half a percent of the state's residents that are eligible to invest in start-up companies are doing so. "This legislation will encourage potential angel investors to provide our entrepreneurs with the capital they need to create jobs, grow companies and fuel the economic future of our state," he said in the news release.

That incredible amount of private money could be leveraged into significantly greater economic growth and could put a lot of people to work in high-growth industries in South Carolina. That is important in a state that needs strong economic growth to make up for the significant loss of manufacturing jobs over the past three decades.

Angel investors actually fill a gap between seed money and the venture capital investment that helps companies grow. New companies go through three typical stages, according to Greenville News reporting several years ago about the then upstart Upstate Carolina Angel Network. Those stages are the seed money that usually ranges from $10,000 to $100,000. That's followed up by start-up funds that come from angel investors contributing between $100,000 and $2 million. Then comes growth, where venture capitalists step in with up to $20 million in investments to facilitate the rapid growth that's the trademark of high-technology enterprises.

At the time UCAN was starting up, South Carolina was 20 years behind North Carolina's research triangle. There is no need to look any further than that to justify the tax credit bill that Gov. Nikki Haley just signed into law. The amount of money that goes toward the credits should be more than made up for in investment, economic development and job growth in South Carolina. And the Upstate, the state's center of industry and commerce, will be among the chief beneficiaries of that growth potential.

Without a doubt, these tax credits hold extraordinary potential to be job generators; there will be a tangible return on the state's investment, and that will come in the form of increased wealth in this state that has a positive impact on everyone. This new law represents a recognition in Columbia and throughout the state that our economic future is dependent on developing home-grown industries that capitalize on this state's strengths and its capital, and that help this state catch up to our neighbors and peers.

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Tax credits will boost economy

A key to continuing this state?s economic revival is encouraging investors to put their money into South Carolina businesses, particularly into the locally grown companies that can grow quickly,